Editors’ Choice Awards highlight best in custody and innovation

Global Custodian profiles the list of nominations for this years Editors' Choice Awards.

By Joe Parsons

Global Custodian will hand out three Editors’ Choice awards at its annual Leaders in Custody awards night, with innovation in market infrastructure being the latest addition.

Alongside the agent bank and network management honours – where the shortlist has already been announced – Global Custodian will recognise those firms that our editorial team believe have excelled over the past year.

These include selecting the best custody deal of the year and the best innovation in service provision. Global Custodian will award best innovation in market infrastructure for the first time.

Please scroll through these pages for detailed descriptions on each award category and the nominations.

Best custody deal of the year

Deutsche Bank and State Street – By far the biggest European custody deal of the year, the custody mandate, this time granted by State Street to Deutsche Bank, marked a significant win for the German bank and its TARGET2 Securities strategy. Having already onboarded other global custodians such as Northern Trust and RBC I&TS, the deal reinforced Deutsche Bank’s custody services within T2S.

State Street and Allianz Global Investors – Behind JP Morgan’s record-breaking $1 trillion custody deal with BlackRock last year, Allianz Global investors’ renewal with State Street was the second largest deal for 2017. The agreement extended the German-based asset manager’s deal with State Street, and would include all middle- and back-office solutions such as fund administration, custody, depositary and trustee services, and data consolidation services. Along with the enormity of the deal, it’s timeliness and State Street’s bounce back from the BlackRock deal earns it a spot on this list.

Northern Trust and Commonwealth Superannuation Corporation – Northern Trust retained one of its most prized custody mandates in Australia last year, with the $40 billion Australia government employee and defence pension fund, known as the Commonwealth Superannuation Corporation (CSC). The CSC was Northern Trust’s first superannuation client in Australia.

Societe Generale Securities Services (SGSS) and UniCredit – Last year SGSS extended its existing global custody deal with UniCredit to 2026. Both banks signed a memorandum of understanding to extend their strategic partnership on securities services, covering custody, settlement and market data management services. “The deal underlines SGSS’s commitment to help its customers navigate in a financial environment undergoing changes and provide them with high quality services,” said Bruno Prigent, global head of Societe Generale Securities Services, at the time of the deal.

Best innovation in service provision

BNP Paribas Securities Services Smart Chaser – BNP Paribas embraced the move to artificial intelligence with the adoption of Smart Chaser, a machine learning and predictive analysis tool for trade processing. By using AI, the tool would be able to predict the likelihood that a trade will not “match” automatically and will require manual intervention. On release of the tool, BNP Paribas said it is reaching around 98% prediction accuracy on trade matching.

BNY Mellon and Hazeltree – For BNY Mellon cash and collateral management has become a key target for growth. This effort led to its partnership with Hazeltree to develop a buy-side focused cash management and treasury platform. The joint service allows asset managers and hedge funds to see all of their cash and collateral balances held across multiple banks and custodians on a single screen. In January it signed up its first client to the platform, Hong Kong-based hedge fund Ovata Capital Management.

Broadridge blockchain in repo – Broadridge was one of the providers to bring a proof-of-concept for distributed ledger technology to the market in 2017, in which it piloted the first repo transaction executed on a blockchain platform.  Completed in cooperation with Natixis and Societe Generale, the blockchain platform was used to provide secure records of the repo trade. The pilot marked a significant step forward in the use of blockchain in capital markets.

Citi Proxymity – In November Citi unveiled a new digital proxy voting system that would be piloted for the UK market in 2018. Signing on four major asset managers to use the platform at four annual general meetings, including one FTSE 100 meeting, which signified real innovation for a process that has been plagued with manual and outdated procedures.

Best innovation in market infrastructure

ASX – The Australian Securities Exchange (ASX) could well become the starting point to the technological revolution for market structure, when it decided to replace its entire equities clearing and settlement system with a new blockchain-based platform. The move was described as “a big moment for the industry”, as well as being “the first meaningful proof that the [blockchain] technology can live up to its potential.”

Clearstream – In 2017 Clearstream underwent a review of its business model offering within T2S, and as part of that effort, it went live with its OneClearstream collateral management service (OneCMS). The service allows collateral to be moved across Clearstream Banking Luxembourg and its Frankfurt-based German CSD. The solution represents the launch of a single collateral management service allowing full interoperability with the two businesses.

DTCC-Euroclear GlobalCollateral ­– GlobalCollateral, the joint venture between the DTCC and Euroclear, has sought to ease the mobility of collateral across the Atlantic, and in doing so, launched the Inventory Management Service (IMS). The service allows firms to use US securities held at the DTCC be used for collateral purposes with Euroclear, in a bid to optimise collateral flows for market participants.

LCH – Bringing the buy-side directly into the clearing and collateral processes has been a strategic focus for LCH, and last year it achieved that goal with the launch of CustodialSeg, a new direct collateral account for asset managers. With Aviva Investors as the first buy-side member of the service, it represented greater control for asset managers in the delivery of collateral, as well as providing them greater options on how to protect their assets.